Saturday, January 10, 2015

I kind of admire Jesse E. Brannen, III, although I have to say he could have found a better use for his time and that of the Eleventh Circuit in my humble opinion. He was suing the IRS for $64.25. That is an odd amount, but it is not random. Of course, when somebody is suing for a trivial sum like that, it will usually be a class action. Hey, I'm part of the class - Hoorah. $64.25 is what it costs to get a PTIN. A PTIN is a Preparer Tax Identification Number.

I have to make a confession of wild recklessness here. Beginning with the Tax Reform Act of 1976, people who were preparing tax returns for compensation had to put not only their clients identifying numbers on the return, but also their own. For many years that would be your social security number. PTINs were introduced because of concerns about identity theft. You could still use your social security number, but most people got PTINs, which were free. I never bothered. I don't know why - just one more thing, I guess. I had a CAF number from the IRS that I had to use when I got a power of attorney. I also reasoned or, perhaps rationalized, that anybody who got their hands on a return I had signed as preparer would be a lot more interested in stealing the taxpayer's identity than mine. At JBC, we didn't call ourselves the high net worth group for nothing.

That changed recently. Everybody who is a paid preparer has to get a PTIN. Preparers who are not CPAs or attorneys or enrolled agents will have to pass an exam and meet a continuing professional education requirement (15 hours). Robert Flach, The Wandering Tax Pro is fuming about CPAs not having the continuing professional education requirement. Like CPAs who do returns are just dying to have all of the 40 hours required for their license devoted to FASBs and auditing standards. Anyway, I had to finally break down and get a PTIN. I paid the $64.25, which I probably got reimbursed for, if I remembered to put in for it. Maybe that is the other reason I'm not that excited about being in Mr. Brannen's class.

His argument was pretty simple. The IRS does not have any statutory authority to charge for PTINs:

Brannen's sole argument is that the Department of the Treasury exceeded its statutory authority when it began charging fees for issuing and renewing PTINs. He contends that no statute enacted by Congress has provided the Department with that power. According to Brannen, 26 U.S.C. § 6109 provides for PTINs to help the Department identify taxpayers and tax return preparers, and thus helps the Department in its tax collection efforts. He insists that merely issuing a PTIN to a tax return preparer is not enough to justify charging a user fee.

That is not the end of the story, though:

Under the Independent Offices Authorities Act, 31 U.S.C. § 9701, agencies are permitted to promulgate regulations that establish a charge for a service or thing of value that the agency provides.

We readily conclude that, under the plain language of 6109(a)(4), the PTIN is issued to tax return preparers for a special benefit. And we readily conclude that the benefit — the privilege of preparing tax returns for others for compensation — is the kind of “special benefit” that qualifies under New England Power. The user fee here clearly confers a benefit which is not received by the general public.

Mr. Brennen wants me in his class and the Eleventh Circuit thinks I'm special. That's worth sixty four bucks and change even if I did forget to put in for it.

A common contribution is essential for the maintenance of the public forces and for the cost of administration. This should be equitably distributed among all the citizens in proportion to their means.

Declaration of the Rights of Man

Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.